TSKB (TSKB TI) - Backed by lower net CoR: Maintain Buy
TSKB reported 2Q19 net income of TRY195m (+5% q-q, +18% y-y), in line with our forecast (TRY185m) and RT consensus (TRY188m). Lower net provisions (-45% q-q) on well-managed asset quality explain the good quarterly results. Core revenues remained flat q-q on widened loan-to-borrowing spread (+61bp q-q) thanks to higher FX loan yields. Trading losses were the main headache of the quarter, driven by swap costs. Fees grew a huge 37% y-y, while opex increased 21% driven mainly by non-HR expenses. Asset quality remained almost intact as NPL ratio materialized at 2.2% (+15bp q-q). Net total CoR dropped to 81bp q-q from 160bp a quarter ago on decelerated new NPL inflows. NPL coverage stayed almost flat q-q at 26%. ROE rose to 15.4% in 2Q (1Q: 14.8%), the second highest ROE after Garanti in our banks coverage.
We revise our FY19-21E net earnings by +2.9%/+2.3%/+3.8%, respectively. Maintain BUY.
Turkiye Sinai Kalkinma Bankasi is a private development and investment bank. Co. provides its clients with an array of products and services in the corporate banking, investment banking and advisory business lines. Co. serves its corporate clients in investment banking through solution oriented treasury products in addition to corporate finance activities such as mergers, public offerings and bond issuances. Co. mainly operates in investment and corporate banking segments. As of Dec 31 2014, Co. had total assets of TL6.23 billion.
TEB Investment equity research analysts and strategist team consists of 8 analysts with an average finance sector experience of 15 years and special focus on international investors.
With our 6 equity research analysts we cover 93 companies across 21 sectors, reflecting 80% of the total market capitalization of all BIST companies and 86% of the BIST100 companies. Our strategy team provides in depth top-down and bottom-up market views with insight on FX and bond markets by publishing sectoral and strategic reports both in English and Turkish.
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